As far as the first question, you could add a 410 Gone message, or use a 301 redirect to send the user back to the search function of the site. The 301 method would be better from an SEO perspective, because it keeps any link weight from the product active in your site. A 410 Gone message should cause the page to be deindexed quickly, but you lose the benefit of any links to the page.
Based on your description, it seems that you have created a page for each product, which you delete when the product is discontinued. To redirect traffic to pages when removed, the easiest method is to create a PHP file in the root of whatever directory contains your product pages. If there are subdirectories of products as well, that is ok, this will still work. The PHP file will contain the following:
In the same folder, create an .htaccess file with the following line:
ErrorDocument 404 nameoffile.php
where nameoffile.php is the name of the file you created above.